Commerzbank: Global Lead, Zinc Markets Tightening

Tuesday October 8, 2013 8:27 AM

The global lead and zinc markets are tightening, particularly in the case of lead, says Commerzbank. Analysts cite data from the International Lead and Zinc Study Group showing the supply/demand surplus in the lead market is continuing to shrink and this year is expected to be around 22,000 metric tons before a projected deficit next year for the first time since 2009. “This is because of mounting demand in China, which is outpacing supply growth,” Commerzbank says. “The surge in demand there is the result of increased automotive and e-bike production and the expansion of the mobile phone system.” The zinc surplus is expected to shrink to around 120,000 tons this year due to Chinese demand, although the ILZSG expects supply and demand to expand at much the same rate next year, so the surplus of 115,000 tons will not be much smaller than this year. “Stronger demand this year has already translated into falling inventory levels on both markets,” Commerzbank says. “LME lead stocks, for example, have dropped by 26% since the start of the year, and zinc stocks by 17%. The global market is thus getting considerably tighter, especially in the case of lead.”

By Allen Sykora of Kitco News;